The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1887-10-17
INTERESTING STORY
OF THE u. y o. UNDER GARRETT.
The Present Financial Distress aud Causes
That Have Contributed to It-Undus
Commercial Credit Gained by n
Fictitious "SnrpIns" Account,

CHICAGO, ILLs, Oct. l8.-The 7ribun
publishes the following:
Thero is 80 much misapprehension Il
tho public mind as to the present trouble
Of the Baltimore & Ohio railroad and q
general q disposition to throw the blam
for the whole disaster upon Mr.. Rober
Garrett, that brief history Of the roa,
and its operations may not be untimely
While Robert Garrett Ia not grea. rail
way manager, 1t would be grossly unfai
to attribute 10 him all the responsibilit,
Tor the present situation. AS he himsel
once said, he inherited a fight; but, IS b,
himself did not say, he inherited prop
erty which had not been strengthened 70,
the competition Of the present day by the
wise management that has characterized
more successful corporations. Among the
causes for the company,s preeent tlnancia,
plight are: fret, vicious sys!em OF &C,
counting; and, second, the Philadelphia
extension. o. ~ Il
From 1860 to 1870 the Baltimore & Ohio
was q aingularly successful railroad. Il
had the only line into Washington from
the North, and 1t was the only line thai
reached from Washington and Baltimore
to the Ohio river under one management,
From tho enormous Government busineaa
that 1t was thus enabled 10 eecure during
the war the company derived enormous
profits. It was principally during this
period that the "surplus account" was
rolled up. Ever since the organization Of
the company 1t has baen their practice in
accounting to Garry on their books what is
called "surplus account" and into this
account vent, as credit, all the money
expended on the road outside Of the oper.
atlng expenscs and outside OF the money
rsieed by the sale OF securities. If, after
payment OF expenses, interest and diyi.
dend Of amp one year there remained
81 100000 to expend in the betterment Of
the property the "surplus account" waa
credited with this million, and as this &C..
count extended over period Of fifty yeara
and embraced all renewals caused by the
devsatationof war, allthe improysnentsin in
the changes from wooden bridgcp to iron,
all improvements in the changing from
iron rails to steel rails, aud all advances TO
and Investments In other lines, It ia not
surpsiaing that itehould stand to-day cred.
iteh with 3 grand total OF nearly $50, ,OGO,.
000. Not a dollar OF this vast sum was
cash. Not dollar OF it was in Quick as.
seta. 1t had all been sunk in tho better.
ment and improvement OF the p.opertv.
but no bonds or stock had heen isaued
against 1t. To any one who understood
the system. thoroughly the surplus &C.
count" probably proved no illusion, but TO
the carelees uninysstigating stockholdsr
it always appeared as a delightful asset in
tho company's balance.Hheet, yet in the
last year this surplus" has probably not
earned ene.hsll Of one per cent. Chicago
companies arc familiar with this item in
tho bnlauce.ahees. 1t generally appears
as "Dassnce Of Income account" but Chi.
cago companies have never carried tbs
account at large fguro for worry many
years. Tho Northwestern Company, as
an instance, has in tho last five years
wiped oil ita books over $4,000 900 OF
similsr surplus"
IA rlD PRGGnEss.
10 keep this item alive on the books in
It's entirety YRS the lifelong hobby OF Mr.,
John ". Garrett. He became 80 enam.
orod Of it tina. he WAS constantly reforr;no
to it IN his talks about the road. and II is
probable that he finally camo to believe,
and went to his gIaye in the belief, tia.
the Baltimore 1. Ohio WAS worth Sl5 OC0-
OOO more than the face value OF It's out.
asanding securities.
upto ISL the Baltimore & Ohio lad
no direct connection west of the Ohio
river. IN thGt .year It built bridges ct
farkershUrg snd at Ba!laire, by the ior.
mer securing, through the Marietta Il Gin.
cinnati road. direct connection to Oinc;n.
natl and 81: Louis, aud by the latter and
the lease Of tho Central Ohio railroad a
ilne under lta own management to Colrm-
bas and Sandusky, In 1874 it complated
its line 10 Chicago ana ~sy in rn,itinn
to compete for all tho seabosrd bns.
iness Of the West. Through The
sncceeting four years OF depression
the baltimore K Ohio made iew
noyementa Of an aggressive character
but With the enormous ctov vth OF saatern
bus'ness IN 1870 and 1880, the Company
began to ieel ito ifolated position as a sea-
board carrier. Baltimore WAS the only
seaport to which 1t had direct lines Of jts
own, and all lis busineas for philaJclphia
snd sew torE he'd to be delivered At Eal.
ttuoto to tnterests II not hobtiie at iesst
not friendly. In 1881 Mr.. Garrett mnJr
his lannon's attompt to aecure tho axie,iao
line Of tho Philadelphia, Wilmington E
Baltimore road from Baltimore to ph;la.
delphia, but with this prizs almost within
his gasp 1t slipped away into the slu,uhna
Of hls great rival, th8 pennoy,yania.
smArting under this defeat without dnlv
the proposals for Joint ,,se NJ
the line TO New York made MIN nv tba
fennsy!vania. Mr.. john W. Garrett in Lis
aagsr decided at once to build his indie.
penlent line from baltimore TO lthilnlcl.
phia, relying upon the Rosdipg road ior n
from Philadelphia to Nav
York. At this time the credit Of tho Bali.
more & Ohio .tood at It's highest, Mr..
Jarrett was enabled to sell in London. In
advance OF tho building OF the road, Il first
mo'tgage oa tue nundl lad Miles oi new
track ol twelve million dollars, the rate Of
interes! being A per cent. Soon alter this
MIR. John W. Garrett died and Mr.. Robert
Garrett aucceeded 10 the Presidency OF tho
fight. The Twelve millions, tne cpi,na,ea
cost of tho line to philadolp.ijB,' melted
away and q iour and half million dollar
additional mortgage was placed upon
tenninsid in ifhilaieipi.ia. Oash advances
by the Baltimore Il Ohio Company brought
the grand total Of the cos. up to oyur
$50. 100000, and the Philadelphia Ina
atands built to-day n sucker and not a
feeder TO tho main eystem. 1t has M
adequate termlnRls in philnleluhia, IL
has heyer essntd Operating o1pshses. Il
haH no proper connection with the Road.
ing road Tor New York. 1t is nj prcaent
line in tho air.
TIE BEGINNING OF TIE END.
While tho PHILADELPHIA lima wao ho;,,